Tag Archives: Mechanisms

[Publication] Perhaps...the first publication under BGSE in Chinese

At the end of last month, I was notified that one of my papers co-authored with my previous advisor, Yue Qiao, was accepted. Today I downloaded an electronic version of it and finally confirmed.

That paper is published with the title The Mechanism Evolution and Information Transmission in Online Markets (我国网上交易的机制演化与信息传导) , at the Journal of Zhongnan University of Economics and Law, 2012, 192 (03). At the moment when we submitted the paper, I was studying at the Barcelona Graduate School of Economics, so interestingly the institution behind my name is BGSE in the published version.

I should say it is an old paper - and I have waited for three years to get it published. It is not a short time period - as I have graduated and have already changed a job. On the other hand, the paper is about mechanisms in online C2C market (Taobao.com as the context), and now I am working at eBay and am committed to C2C behavior analysis. Sounds like a regression, right?

Perhaps it is the version reason why I chose eBay immediately right after I got their offer. Theories need to be examined in the real market environment, and eBay is exactly the right place to do this! I have no reason not to be excited about working here. As the theoretical research is accepted, I should spend more time on the empirical part now. Hopefully, these years of knowledge gaining and work experience will enhance my analytical thinking ability and get a fruitful result afterwards.

I'm going on the way, and there is no word called "give up" in my dictionary.

The print version of this paper in Chinese can be download here: Mechanism_evolution_C2C.pdf

Natural experiment on public good and social behaviors

Today, suddenly I saw the latest issue of AER (SEP, 2010. How late I was!). I failed to stop myself from having a look at it, although it is already in the exam weeks. After a balance, I chose to have a brief look at this issue. It is a kind of evidence that my life has become worse - I used to at least read the content of every issue of AER, JPE, QJE every season... Now it has been such a long time that I have no access to these journals. I cannot stop myself, and I was so excited when I saw the red face of AER again. (I was also overexcited when I heard the news that LYX 2.0 is going to be released. Fantastic new features: Advanced Search, Spell-checking on the fly, Multilingual Thesaurus, Table features, Progress view and debugging pane, Instant preview inset, etc!!! Awesome! For details, just jump to http://wiki.lyx.org/LyX/NewInLyX20)

OK. Go back to AER. Two articles attracted my interests:

First one first. The first reason why I was attracted because of the words "social" "contribution" "online communities" and "field experiment". Without doubt, it reminded me of Michael Zhang's paper immediately (also, here is a brief intro in Chinese I wrote before).

Then the author. The world is so small. I just met Sherry Xin Li this spring when I was spending a month auditing courses and seminars in Tsinghua and Peking U. Her topic was "虚拟世界实验中的社会距离问题", or "Social Distance in a Virtual World Experiment". It was an interesting paper about experiments they did in the virtual world game "Second Life". Thus, it is interesting for me to see her work again, since the online market is always a market I'm paying attention to.

In this paper, she/they designed several experiments to study how the social comparison increases contributions to an online community. Here are some main results:

  • After receiving behavioral information about the median user’s total number of movie ratings, users below the median demonstrate a 530% increase in the number of monthly movie ratings, while those above the median do not necessarily decrease their ratings.
  • When given outcome information about the average user’s net benefit score, above-average users mainly engage in activities that help others.
  • Effective personalized social information can increase the level of public goods provision.

Public good is always an interesting topic for economists, perhaps due to the fact that market inefficiency/failure has always been concerned by economists.  Now I'm interested in the social behaviors. Can we actually design a mechanism to improve the supply of public goods? What are the necessary conditions for those mechanisms to function well?

Moreover, another interesting point is that how to utilize the data from the Internet. Frank has a good comment on it. I'm learning from more and more published papers to see where are the pitfalls.

OK, go to the second paper. The law of the few stresses an empirical phenomenon: in social groups a very small subset of individuals invests in collecting information while the rest of the group invests in forming connections with this select few. The interesting thing here is that someone prefer to invest in information while the rest invest in forming connections (Which type I am? Both???Haha~)

It is a kind of traditional social network application, and a little old (the working paper version I found was written in 2007, now it is 2010! what a long publishing cycle!). The authors talked about the structure of social network, and of course, network game. The meaningful suggestion for policy makers (either government or advertisement makers) is that

by collecting information about the communication network, for example by asking a subset of the community members to report “with whom they talk to” about a particular matter, the government can identify an opinion leader, the individual who receives most nominations. Each dollar spent on this opinion leader will then spill over to all community members.

Which have been confirmed by some of my friends who are using similar strategies in their broadcastings.

Fine... I'm thinking about my master project now so everything I'm caring about is how to apply social network to a certain field. Hopefully I can find some interesting points a few days later. But anyway, I need to pay attention to the exams. Go back to books and problems.

What Do We Pay For Asymmetric Information? The Mechanism Evolution of Reputation, Punishment and Barriers to Entry in Online Markets

Well, in fact it is not a piece of news. It is the title of a paper I wrote last winter. After finishing it, I went on doing something else and forgot it. Now it is already a new spring, I do not want to submit it to any journals since I have nothing fresh to add into it. Without anything new, I don't have the incentive to edit it. Therefore, I share it with you here.

Title

What Do We Pay For Asymmetric Information? The Mechanism Evolution of Reputation, Punishment and Barriers to Entry in Online Markets

Abstract

The appearance of the Internet reduces transaction costs greatly, and brings the boom of online markets. While we are trying to regard it as the most realistic approximation of perfect competition market, the asymmetric information and a series of problems caused by it stop us from dreaming. As the old saying goes, there is no free lunch. This summer witnessed the collapse of the reputation system in Taobao, the biggest online transaction website in China. In fact, during the evolution of mechanisms in online markets, reputation, punishment and barriers to entry have been established in turn. What do we pay for maintaining these mechanisms? In which circumstance will they be effective?

In this paper I try to build a series of models within the principal-agent framework and repeated games to explain why and what we should pay for asymmetric information while enjoying shopping online. Specifically, these mechanisms are considered step by step and their boundary validation conditions are discussed. Finally, as the conclusion indicates, in a larger range that a mechanism is effective, the more opportunity cost should be paid as a rent for information.

Download (English Version)

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